Bailment is a term used for the relationship between the owner of a certain piece of property, known as the bailor, with the person or entity to whom this property will be transferred.
The person to whom the property is transferred is known as the bailee. It is important to note that the property is merely transferred temporarily, so only possession changes, and not actual ownership of the property or chattel. In addition to this, the bailee is not always allowed to make use of the property even though it is under his possession; it different from a lease agreement. The bailor may also retrieve the property at any time, without being required prior notice, and, to a certain extent, the bailee assumes liability for the property while it is under his care.
The level of liability a bailee assumes may depend on the nature of the relationship between him and the bailor. In some cases, if both entities benefit from the transfer, the level of liability is not as high when the bailor benefits more from the transfer. In such a case, the bailee is required only the minimum level of care.
The concept of bailment falls under common law. One example of a situation in which the concept of bailment is used is when a person borrows an appliance from his friend. The relationship also exists between a car owner and a valet. It can also exist in cases when stockholder who will not be available for a certain period of time asks someone else to monitor his stock portfolio.